Jim’s Take

Health Care Costs – Medicare Attempts to Reduce Health Costs

Medicare is embarking on a new program, and I think it’s a good one. I hope more insurers follow their lead.

Basically what’s happening is that Medicare is proposing a trial program in the hip and knee replacement surgeries in which they reward QUALITY of healthcare rather than VOLUME of healthcare.

While it’s generally true that hospitals and doctors who do MORE of a procedure usually do it better, there are hospitals where the quality is lacking and the readmission rate is dramatically higher than elsewhere.

Currently, that benefits the hospital because every procedure is billable. So if Harry has a knee replacement, the hospital gets to bill Medicare. Then when Harry goes home but later is readmitted because of an infection, great news for the hospital! They get another admission, another billing, another profit opportunity.

Under the new system – being tried in 75 areas of the country – the Washington Post reports that the program would require “hospitals to partly repay the government if patients get avoidable infections and other complications but [would reward] them with extra payments if patients do well.”

HHS Secretary Sylvia Mathews Burwell told reporters that the rule will “treat these surgeries as one complete service rather than a collection of individual services,” holding hospitals accountable for care up to 90 days after discharge. The article adds that officials chose knee and hip replacement surgeries “because they are the most commonly performed Medicare inpatient surgeries and are expected to continue to grow as the population ages.”

It’s a rare display of clear thinking on the part of a government bureaucrat, and I hope that it proves to save the $30 Million per year that they project and that they roll it out to the entire country.

It might also be nice if the Blue Crosses, Aetnas, United Healthcares, etc. of the world were to follow their lead and group appropriate sets of procedures into one payment bubble. Make hospitals and doctors strive to cure us with as few complications as possible. Congratulations, Centers for Medicare and Medicaid Services!

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